How the produce industry got Elmo

Kids across the country soon will be nagging their parents to buy them carrots, broccoli and apples, thanks to Michelle Obama.

It’s not the power of the pulpit, exactly — but the power of Elmo, Big Bird and Cookie Monster.

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At the White House last week, the first lady announced that the Sesame Workshop has agreed to give two years of character licensing to the Produce Marketing Association, free of charge, as part of her Let’s Move! campaign to combat the childhood obesity epidemic.

“Imagine what it will be like to have our kids begging us to buy them fruits and vegetables instead of cookies, candy and chips,” Obama said in the State Dining Room.

So how did the produce industry — which operates on thin margins and does relatively little marketing compared with processed foods — score a free character licensing deal believed to be worth tens if not hundreds of millions of dollars?

The back story involves a series of connections between a White House chef turned policy adviser, a best-selling book and a former Coca-Cola executive who used the marketing skills he learned selling sugar-sweetened beverages to instead promote carrots.

It’s hard to overstate how big the “Sesame Street” partnership is for growers, packers and retailers of fresh produce. Sesame characters are beloved by children, who mercilessly use what marketers call “pester power” to persuade their parents to buy certain products.

As Obama pointed out on Wednesday, research has shown that if you put an Elmo sticker on an apple, twice as many kids will choose the apple over a cookie, compared with the same choice sans sticker. And it’s not just fruit that can be made irresistible to kids. Three years ago, the Vidalia Onion Committee took a gamble on Shrek licensing for marketing to kids and it increased sales by 50 percent.

Under the deal, there is no limit to how many produce companies can use the “Sesame Street” characters over the next two years as long as the product they’re marketing is fresh, with no added sugar and not a choking hazard, according to Bryan Silbermann, president of PMA.

“This is huge,” Silbermann says. “I think there’s a potential for [the characters] to be on everything in the produce section.”

In fact, there are so many companies interested in using the characters, Silbermann jokes he might need to hire a security firm to bolster his door. Elmo, Big Bird and the others could start appearing on produce displays as soon as mid-2014.

To understand how the produce industry landed the Sesame Street licensing deal, start by looking on The New York Times best-seller list for “Salt Sugar Fat: How the Food Giants Hooked Us,” released earlier this year. In that book, Pulitzer Prize-winning writer Michael Moss features Jeff Dunn, the former president of Coca-Cola North America, who decided to turn the marketing prowess he gained leading the beverage company to work for fruits and vegetables after becoming concerned about the growing obesity epidemic.

According to Dunn — who is now president and CEO of Bolthouse Farms, producer of 45 percent of the North American carrot market — Moss suggested about three months ago that he reach out to the White House to talk about using marketing to help tackle obesity.

Moss recalls the exchange differently. “Sam Kass reached out to me to talk about the book when it came out, and the people in it, and I said that when it came to marketing foods, Jeff Dunn was one of the most knowledgeable of the industry veterans I had met,” Moss wrote in an email.

However the connection happened, it was good timing, because the East Wing had been strategizing about food marketing to kids for several months, according to an administration official.

Shortly thereafter, Dunn and Bolthouse Chief Marketing Officer Todd Putman, also a former Coca-Cola executive, met with Kass, the executive director of Let’s Move! and a senior policy adviser to the first lady.

“It moved very quickly from there,” says Dunn, who notes Kass already had talked to “Sesame Street” about the licensing deal. A couple of weeks later, Sesame Workshop and PMA started having calls with the Partnership for a Healthier America, the nonprofit launched alongside Let’s Move! in 2010 to strike private-sector agreements in support of the campaign.

Sesame Workshop, in a statement sent over the weekend, says it heard from PMA and PHA about eight weeks ago. Sesame Workshop has “long been committed to the health and well-being of children through [its own] Healthy Habits for Life initiative [and] thought it was a natural fit,” says the statement, which adds that two years is the general term for any of the organization’s licensing agreements.

By not charging the produce industry, the Sesame Workshop is forgoing millions in licensing fees. As its website reports, product licensing accounts for as much as 38 percent — the largest chunk — of the not-for-profit’s $113 million in annual revenue.

“We will receive support to offset the costs of the development of creative elements and promotions,” Sesame Workshop explains. “The power of ‘Sesame Street’ to help families make healthier choices is priceless.”

But Kass heaps much of the credit for getting the deal done on Michelle Obama. “This is a really big deal,” he says. “None of it could have happened without the first lady and her call to action on this issue.”

The Sesame Workshop announcement follows the first ever White House convening on food marketing to kids last month, which health advocates hoped was a sign Obama was reigniting the conversation about stemming the barrage of ads aimed at kids for foods loaded with sugar, salt and fat.

“I’m here today with one simple request — and that is to do even more and move even faster to market responsibly to our kids,” said Obama to an audience of food and beverage executives and health advocates at the event.

“Ideally, in a decade or so, we would see a dramatic shift across the entire industry,” she said. “We’d see companies shifting marketing dollars away from those less healthy products and investing those dollars in your healthier products instead. That’s how we can make healthy eating a way of life for our kids and for our families.”

While the first lady has been clear she wants to boost healthy foods marketing, she also wants to see less marketing of unhealthy foods to kids.

But marketing to kids is a third-rail issue in food politics. The industry pulled out all the stops to crush a voluntary guidance that was being developed by an interagency working group in 2011 and 2012. It was an ugly fight, and health advocates were dismayed the White House didn’t publicly stand up for the effort, led by the Federal Trade Commission, that would have set nutritional guidelines for foods peddled to children under the age of 12.

“There was an enormous amount of industry pushback — it was unlike anything I’ve ever seen,” recalls Margo Wootan, director of nutrition policy at Center for Science in the Public Interest. “I think it shows just how important food marketing to kids is to these companies. They have to cultivate brand loyalty early.”

“[The administration] got very timid before the election,” says Wootan, who adds she’s hopeful the White House will redeem itself for not standing up for the effort during a politically sensitive time. “Since then, they’ve tried to be bolder.”

If the East Wing had brokered a multimillion-dollar marketing deal for any other sector of the food industry, it might be something of a scandal, but since the overwhelming majority of research shows Americans should eat more fruits and vegetables, it’s seen by many as an innovative approach.

“It’s exactly what government ought to be doing,” Silbermann says. “If you have a pulpit, you have to use it responsibly.”

Silbermann says PMA is planning to conduct a baseline study before the Sesame characters are placed on produce items so they can measure how they are affecting consumption among kids.

“The produce aisle is really the last place in the grocery store to activate and use marketing,” explains Dunn, who envisions “Sesame Street” characters being utilized in displays, packaging, interactive games and social media to get kids and families engaged. “The entire department can be more exciting.”

“Marketing works,” says Dunn, who used to run the marketing operation at Coca-Cola that sold a billion Cokes per day. “It’s just where you point it.”